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Demand Response Will Double By 2020: Here's Why

Jessica Kennedy's picture
Energy Consultant, Energy Curtailment Specialists

Jessica Kennedy has worked in the energy industry since 2008. She earned her bachelor's degree in English from the State University of New York at Geneseo. She earned her master's degree in...

  • Member since 2013
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  • Jul 29, 2014

Recent findings from Navigant Research indicate that demand response (DR) is poised to take over the world as a solution to electric grid instability.  Growing integration of intermittent renewable energy generation into the grid, and problems arising from aging infrastructure, make a perfect niche for DR programs in almost every electricity market.  Navigant estimates that demand response load curtailment will skyrocket from a 2013 estimate of 57,764 megawatts (MW) to 140,472 MW by 2020, as the chart below illustrates.

Navigant Graph


So why does demand response play such a prominent role in our future electric grid?  There are four excellent reasons.


The number one role of demand response is to relieve the grid of stress at critical times when it is at risk of blackouts or voltage fluctuations.  Because energy infrastructure in the United States, and in many places around the world, isn’t updated enough to meet today’s enormous demand for electricity, there is a need for an emergency program like DR to save communities and businesses from the damages resulting from power loss.  Ever since DR programs have been implemented, countless blackouts and brownouts have been averted.  This prevents damage to home and business equipment and keeps our power grid secure as we work on improving our infrastructure to 21st century standards.


One issue all populations will need to deal with over the next 20 years and onward is integration of renewable generation into the electric grid.

Generation sources like wind and solar are certainly going to overtake fossil fuels in the next decade or so, but they produce power intermittently (after all, the sun can’t shine at night, and we can’t usually count on a super moon).  The energy industry is adapting to renewable power sources, in part, by improving forecasting capabilities.  IBM, for example, has developed technology that forecasts solar power potential based on data from various sources such as cloud cover and satellite imagery.  They named it Watt-Sun.  While IBM doesn’t plan on making Watt-Sun into a commercial product anytime soon, the company demonstrates that advanced forecasting technology is finally at our fingertips.


While DR continues to grow significantly in North America, other areas of the world will also adopt it on much larger scales.  North America will remain the largest DR market, but Europe is not far behind, and will likely grow even faster in the next few years.  Navigant predicts that other markets like Latin America and the Middle East that aren’t even on the chart for 2014 will implement DR by 2020.  It’s clear that as our electricity needs grow, so will our need to use demand side management to keep the grid in-check.  We’ve made amazing technological advancements in just the past 100 years alone, but the structure of our electric grid, and its exponential growth in some areas, still pose challenges to reliability.


Demand response not only ensures a stable electricity delivery system, but also helps control energy costs.  Renewable resources are still pricey and, as costs of pollution and resources go up, fossil fuel generation will rise in cost as well.  Real-time pricing (RTP) will give consumers control over their energy expenses allowing them to shift higher energy consumption to off-peak times (like during the night) when electricity is cheaper.  The utilities and grid operators save money recovering from such emergencies and consumers save money on their bills as a result.

So keep an eye on the demand response industry over the next few decades.  It’s in a position to grow as fast as renewable energy, if not faster, and it will be a vital tool in the quest for reliable energy in developed and developing areas of the world alike.


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